Making A Budget: 7 Simple Steps for Creating One You’ll Stick To

Learning how to make a budget is one of those tasks in adulthood that kind of feels like homework.

You know you need to start using a budget to stop the overspending, and then you delay and put it off for another day.

But changing your mindset around creating your own budget and using it can be one of the most empowering things you do this year.

It’s a wonderful way to be more mindful of your spending, start having control over how much money is in your bank account, and can help you in developing a real financial plan.

Also, making a budget is a great way to give you peace of mind and more breathing room.

And if you want to stop living paycheck-to-paycheck, then these steps below will help you in learning about budgeting and how to do it.

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Why Start a Budget?

If you’re still a bit hesitant to start a budget, then here are some other benefits of creating one:

• You’ll be able to get rid of debt more quickly
• It gives you the money you need to always pay off your bills without stressing
• A budget gives you more money for emergencies
• It will make you a more confident person once you have this part of your life under control
• Budgeting helps you achieve your goals and go after dreams you’ve been putting off
• You’ll be able to buy the things you’ve really wanted
• It’ll help you get rid of bad financial cycles

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7 Steps for Creating and Sticking to Your Budget

Making and using a budget is pretty easy. Just grab this budget worksheet and follow the steps to create one that works for you and your lifestyle.

1. Figure Out Your Why

Before you start a budget, I think it’s important to figure out why you want to do this.

So for instance, you might want to create a budget because:

• You want to get out of debt
• You want to have enough money to have fun and stop struggling
• You want to have money to save up for retirement

What is more important to you? Figuring this out will help you stick to your budget plan.

2. Write Down Your Monthly Income

Next, make a list of your different sources of monthly income. And beyond your normal paychecks, you’ll want to add in the money you bring in from things like side hustles, veteran benefits, or Social Security.

And if things vary each month, then just prudently estimate your monthly income so you don’t feel caught off guard when things aren’t working with your budget.

Here’s an example:

Income	Amount
Paycheck 1	$1,400
Paycheck 2	$1,400
End Total	$2,800

3. Create a List of Your Monthly Expenses

For this step, take a look at your monthly expenses by combing through your bank account and checking over your credit card expenses.

Then make a list of your fixed expenses such as insurance or rent, and how much it costs.

Next, create a list for you variable expenses which are ones that change each month. So think groceries, gas, pharmacy, or clothes. Estimate how much you spend a month on each of these things.

And lastly, make a list of annual payments. Figure out how much each one is, divide them by 12, and set aside that amount of money each month so you can easily make the payment when the time comes.

Expenses
Fixed Expenses
Mortgage	$1,200
House Insurance	$208
Car Insurance	$160
Cell Phone	$100
Utilities	$250
Variable Expenses
Groceries	$400
Gas	$150
Clothes	$50
Pharmacy	$30
Eating Out	$120
Total estimated expenses	$2,668

4. Compare Your Income and Expenses

Evaluate your end numbers and see whether your expenses exceed your income or not.

If Expense Don’t Exceed Your Income: If after your expenses you have let’s say $400, then that’s great! You can either put that towards savings or another category in your budget. Or, if you have a savings goal or just want a bigger surplus at the end of the month, look at where you can cut back on your spending and adjust accordingly.

If Your Expenses Do Exceed Your Income: If you’re spending more than you’re making, then this is the time to first look at all the unnecessary expenditures and see what you can cut out or cut back on. Then take a look at monthly bills and see where you can negotiate for a better monthly payment or cut back on things like electricity. Another great way to take care of your deficit is to increase your income by taking on side gigs, looking for a better paying job, or asking for a pay raise.

5. Choose the Right Budget for You

A simple budget tool like the one I provide will definitely do the trick. But if you’re curious about other forms of budgeting, then here are some good options:

• The EveryDollar App: Created by Dave Ramsey, it’s a great way to quickly track where your money is going from your phone.
• 50/30/20 Budget: 50% of your monthly income goes toward needs (mortgage, insurance, etc.), 30% goes toward wants (vacation), and 20% goes to savings and debt repayment.
• Zero-Based Budget: You give each dollar in your budget a purpose until there’s nothing left. That way you’re not overspending and you know where everything is going.
• 60/30/10 Budget: 60% of your monthly income goes toward your needs, 30% towards wants, and just 10% towards savings. This is good for people who don’t want something as restrictive.
• Cash Envelope Budgeting: You create a category for each envelope (groceries, gas, etc.), put cash with that amount into those envelopes and only spend what you have in there. If there’s nothing left for a certain category, you don’t get more cash or use a card, that’s it.

6. Keep Track of Your Spending Each Month

Once a month, take a look at your spending and see if you stuck to your budget.

If you find that you went over budget, then make adjustments for the new month and ask yourself these questions:

• Were there unexpected expenses? Do I need to create a savings category for unexpected expenses?
• Do you need a new budget category?
• Do you need to spend less for certain expenses?
• Are there places where you found yourself making excuses?
• Were you able to meet your savings goal?

And of course you can adjust your budget if you feel that your savings goals have changed, you don’t feel that you’re meeting your goal on the expected timeline, or maybe you set too intensive of a budget.

7. Find Other Ways to Create Breathing Room

If you find that you want more breathing room in your budget, then you’ll need to make some lifestyle changes.

Here are some questions to ask yourself:

• What are some things I can live without for a short amount of time?
• Are there other ways I can make more money?
• Can I change to a better paying job?
• Can I move to a less expensive living situation? If so, what are my options?
• What can I cut out in my weekly grocery runs?
• Can I move to a less expensive internet and/or data plan?
• How can I limit my one-off expenses?
• Can buying in bulk save me money?